FOREIGN EXCHANGE RETENTION QUOTA FOR EXPORTERS

FOREIGN EXCHANGE RETENTION QUOTA FOR EXPORTERS

 FOREIGN EXCHANGE RETENTION QUOTA FOR EXPORTERS (i) Merchandise exporters are entitled to a foreign exchange retention quota of 40% of repatriated f.o.b value of their exports. However, for exports of goods having high import content (low domestic value –added) like POL products including naphtha, furnace oil and bitume

  1. (i) Merchandise exporters are entitled to a foreign exchange retention quota of 40% of repatriated f.o.b value of their exports. However, for exports of goods having high import content (low domestic value –added) like POL products including naphtha, furnace oil and bitumen, readymade garments made of imported fabrics, electronic goods etc. the retention quota is 7.5% of the repatriated f.o.b value.

(ii) Foreign exchange out of retention quota may be maintained in FC accounts with the concerned ADs in US dollar, Pound Sterling, Deutsche Mark or Japanese Yen upon realization of the export proceeds. Balances in these accounts may be used by the exporters for bonafide business purposes, such as business visits abroad, participation in export fairs and seminars, establishment and maintenance of offices abroad import of raw materials, machineries and spares etc. without prior approval of Bangladesh Bank. It should be noted that since exporters will use foreign exchange from the retention quota for business visits abroad, no separate business travel quota will be admissible. Foreign exchange from the exporter’s retention quota cannot be used for investment abroad by the exporter.

(iii) Foreign exchange out of exporter’s retention quota may also be kept as interest bearing renewable term deposit with the concerned ADs in Bangladesh in UD dollar, Pound sterling, DM or Japanese Yen, with minimum balance of US$ 2,000 or £1,500 or equivalent. Periods of such term deposits may be determined in accordance with normal banking practices / normal banking considerations. Interest on such deposits may be allowed at rates comparable to the prevailing Euro deposit rate for the relevant currency.

  1. Retention Quota for Service Exporters: Service exporters may retain 5% of their repatriated income in foreign currency accounts or as renewable time deposits in the same manner as mentioned above. Funds can be drawn from these accounts to meet expenses for bonafide business travel abroad.

However, foreign exchange earning on account of indenting commission or agency commission for export from Bangladesh can not be credited to such accounts since these incomes originate form Bangladesh sources.

  1. International credit cards may be issued to exporters against foreign exchange retention quota. The arrangements for issuance of international credit cards and use thereof by exporters shall be as under:

Eligibility for holding international credit cards :

International credit cards may be issued in favour of upto (3) top level executive of an exporting firm,/organization holding retention quota FC Accounts. An exporting firm / organization may avail of the card facility from one card issuing company only. It will be upto the card issuing company to accept or decline a request from an FC Account holding exporting form/organisation for issuance of international credit cards. All records, documents, accounting statements relating to issuance and use of credit cards should be kept ready and available for inspection/examination by Bangladesh Bank as and when required.

  • Instructions to be followed in issuance and use of credit cards :
  • Cards may be issued for use against funds available in the retention quota FC Accounts, and the annual personal travel quota entitlements of the cardholders as per Para 1. Chapter 19 (Bangladesh Bank Guide Line Manual). Immediately on issuance of a card or cards, a report must be sent to the DGM (Operation Division), Foreign Exchange Policy Department, Bangladesh Bank, Head Office, Dhaka as per proforma given in Appendix 5/63(Bangladesh Bank Guide Line Manual). the cards may be cancelled as soon as the fund available in the FC account is fully utilized, unless there is reasonable prospect of replenishment.
  • The AD holding the retention quota FC account of the exporting firm / organization shall settle the charge slips and statements of expenses received from the card issuing company, by debit to the concerned FC account.
  • Utmost caution should be exercise to guard against drawings in excess of the entitlement. To facilitate monitoring towards limiting the liabilities on count of card use the FC Account holding AD may from time to time advise the credit balances of the FC Account to the card issuing organization.

Under no circumstances shall any foreign exchange be released in favour of the card issuing company without first having the FC account debited / available travel quota entitlement drawn (and in the event such balance / travel entitlement is exhausted, without prior permission of Bangladesh Bank). The card issuing company shall have the right to recover directly from the exporting firm/ organization its dues in local currency, but foreign exchange against such receipts may only be availed with debit having first been raised in the retention quota FC account of the exporting firm / organization or out of available travel entitlement of cardholder (or only with prior approval of Bangladesh Bank in case both sources are exhausted).

Bangladesh  Bank may direct the card issuing company to withdraw the card facility extended to an exporting firm / organization in case of repetition of incurring obligations against card use in excess of foreign exchange entitlements.

  • Reporting of settlement in foreign exchange against card use :

All payment is foreign exchange by debit to FC account in settlement of dues to the card issuing organization shall be reported to Bangladesh Bank in schedule EFCP-2 along with TM form dully filled in.

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